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Louisiana, Alabama Wait for $2.9B Steel Plant Decision

Wed April 25, 2007 - Southeast Edition

By Alan Sayre


NEW ORLEANS (AP) With a decision expected in May, there’s no public indication of whether Louisiana or Alabama has the upper hand for getting a $2.9 billion steel plant — one of the largest economic development projects aimed at the South in years.

Most details of the negotiations with German conglomerate ThyssenKrupp AG have been kept secret since the company eliminated Arkansas from consideration in January, leaving Alabama and Louisiana as finalists. The plant is expected to employ 2,700 people when it begins producing steel in 2010. Up to 40,000 construction workers are expected to build the 6.6 million-sq.-ft. (610,000 sq m) facility.

The plant will produce carbon steel and stainless steel for automakers, electrical companies, appliance manufacturers and others, ThyssenKrupp said.

On April 3, Louisiana Economic Development Secretary Mike Olivier gave one of his few public statements about the bidding during a legislative hearing, in which he said Louisiana’s final offer fell below what ThyssenKrupp had wanted.

However, Olivier said he didn’t believe Alabama had met the request, either. He wouldn’t say what the company was seeking, or what Louisiana offered. But he said Louisiana had made its final offer to ThyssenKrupp — and that the state couldn’t go any higher.

“It’s a very expensive project, and I don’t know that any state could meet that expectation,” Olivier said.

Alabama officials wouldn’t comment. All ThyssenKrupp would say is that the company is analyzing the proposals and hoped to make a decision “as soon as possible.” The final decision will be made by ThyssenKrupp’s board in Germany.

The proposed Louisiana site for the plant is in St. James Parish, between New Orleans and Baton Rouge, along the Mississippi River. In Alabama, a site near Mobile is under consideration. Last month, the company filed applications for the environmental permits in both states.

Louisiana Gov. Kathleen Blanco and Alabama Gov. Bob Riley have each met with ThyssenKrupp officials in Germany.

The bidding, of course, starts with money.

Late last year, the Louisiana Legislature approved a $300 million fund for site improvements and construction; Blanco wants lawmakers to add another $100 million. In Alabama, Riley got the legislature to approve $400 million in borrowing authority to draw ThyssenKrupp and other industrial projects. Both states also have bond authority that could be used in the bidding.

Early on, Alabama was widely thought to have a big advantage for a power-hungry steel plant: much lower electricity rates than Louisiana. But recently, public utility regulators said Entergy Louisiana is offering to provide power at cost to ThyssenKrupp. The Public Service Commission said the company would not pass along the cost to ratepayers. Entergy would not comment.

Perhaps the next big money issue is transportation. Officials of both states have said that since part of the new plant will process slabs from Brazil, the Mississippi River’s deep channel will provide cheaper transportation than the Mobile Ship Channel. But Alabama hopes that disadvantage can be offset somewhat by its proximity to southern automobile plants that would be using finished steel from ThyssenKrupp.

ThyssenKrupp also is hearing from politicians.

Six senators — Alabama’s, as well as those from Florida and Mississippi — have backed Alabama’s bid. In a letter in mid-February, the senators said they “truly believe the Alabama site represents ThyssenKrupp’s best opportunity to develop a world-class facility with the latest technology and more importantly, a work force committed to ThyssenKrupp’s success.”

On March 28, Arkansas Gov. Mike Beebe, his own state’s bid earlier set aside, countered on behalf of Louisiana with his own letter to ThyssenKrupp’s chairman. He said the Louisiana site would “have a very positive impact on Arkansas through our two states’ shared reliance on commerce, recreation and trade along the Mississippi River.”

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